Bitcoin's Stock Market Connection: Understanding the Current Correction

Bitcoin Correlations Report, February 2025

Bitcoin is down 19% from its all-time high. In just the past few days, it has dropped 11%. At this point, that’s a significant correction, not just a small dip.

But this move isn’t completely unexpected. It didn’t come out of nowhere. It’s the logical continuation of three major trends, one of which is likely to continue dragging on Bitcoin’s performance.

Let’s break down the causes, assess how much downside remains, and see if there are good trading opportunities right now.

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Bitcoin's Stock Market Connection: Understanding the Current Correction

The Takeaway

Bitcoin is down 19% from its all-time high, following the NASDAQ's decline. This correction is made possible due to the stock market's natural mean reversion cycle.

Our simulations indicate a 23% chance of Bitcoin dipping below $83,000 and only a 3% chance of falling to $75,000 in the coming weeks.

Despite the market-wide selloff, relative pricing between Bitcoin and related assets remains consistent, with no significant dislocations creating special opportunities.

For investors looking to build positions, a cautious Bitcoin DCA approach makes sense until market conditions improve, as the current correction has already reached levels that historically present good entry points.

Mean Reversion